offering memorandum - loopnet...848 fulton street has tax class 2a designation, with an annual tax...

O F F E R I N G M E M O R A N D U M

848F U L T O N

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Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other per-son or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compli-ance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

All property showings are by appointment only.

N O N - E N D O R S E M E N T N O T I C E

C O N F I D E N T I A L I T Y A N D D I S C L A I M E R

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must

verify theinformation and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of Marcus & Millichap Real Estate Investment p. 2 Services of New York, Inc. © 2016 Marcus & Millichap. Activity ID: Y0330946. All rights reserved.

848F U L T O N

Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other per-son or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compli-ance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

All property showings are by appointment only.

N O N - E N D O R S E M E N T N O T I C E

C O N F I D E N T I A L I T Y A N D D I S C L A I M E R

M A N H A T T A N , N E W Y O R K

848F U L T O N

RENTABLESQUARE FEET

4,496L O C A T E D I N B R O O K L Y N

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848F U L T O N

TABLE of CONTENTS

O V E R V I E W O F P R O P E R T Y

P R I C I N G A N D F I N A N C I A L A N A L Y S I S

M A R K E T O V E R V I E W

T H E A D V A N T A G E O F O U R A P P R O A C H

A D V I S O R Q U A L I F I C A T I O N S

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of the PROPERTYO V E RV I E W 1 L O C A T E D I N B R O O K L Y N

6This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future

performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus & Millichap. Activity ID Z0330002.

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I N V E S T M E N T H I G H L I G H T S

Mixed-use building in the heart of Clinton Hill situated on the Fulton Street retail corridor. Subject propertyprovides a healthy unit mix in addition to the ground floor retail, with two 2-br units and two 1-br units. 848Fulton Street is conveniently located steps from the C train’s Clinton-Washington Avenue stop.

848 Fulton Street has tax class 2A designation, with an annual tax bill of $24,124. The building is built 20ftx 50ft on a 20ft x 80ft lot, with R7A, C2-4 zoning. Units pay their own utilities and have separate HVAC systems.

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Mixed-Use

Clinton Hill

Fulton Street

C Train - Clinton-Washington Avenue Station

Tax Class 2A

$24,124 annual tax bill

R7A, C2-4 Zoning

Units have Separate HVAC Systems



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P R O P E R T Y S U M M A R Y

The Offering

Property Address 848 Fulton StreetBrooklyn, NY 11238

Property Type Mixed-Use

Assessor’s Parcel Number 02010-0030

Zoning R7A, C2-4

Construction

Roof New (completed two years ago)

Number of Floors 4

Number of Suites 5

Floor Plate Size 20ft x 50ft

Site Description

Year Built 2003

Number of Units 4

Number of Buildings 1

Number of Stories 4

Apartments - Rentable Square Feet 3,100

Retail - Gross Leasable Area (GLA) 1,396

Total Rentable Square Feet 4,496

Mechanical

HVAC Yes

Fire Protection Sprinkler System

Elevator No



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Exterior



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Street



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Interior Entryway



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Restaurant



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Restaurant



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2 Bdr 2



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Basement



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Basement and Mechanicals



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Roof



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Roof



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In the Area



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Shopping and Leisure



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Barclays Center and Accessibility



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Area Maps



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T A X M A P



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Z O N I N G M A P



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A E R I A L V I E W

848F U L T O N

and FINANCIAL ANALYSIS

P R I C I N G 2 L O C A T E D I N B R O O K L Y N



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I N V E S T M E N T O V E R V I E W

The Offering

Price $3,500,000

Down Payment 50% / $1,750,000


Price/Square Foot $778.47

# of Units 4

Major EmployersCompany Local Employees

Iqor US Inc 12,000

NYC Police Department 11,059

Asher Aladjem 10,000

Verizon 9,298

New York Rangers 8,518

Lord & Taylor LLC 8,500

Suncoast 8,200

Patriarch Partners LLC 8,112

Aeon USA Inc 8,000

US Post Office 7,940

Kaplan K12 Learning Svcs LLC 7,383

City of New York 7,047

Vital Data

CAP Rate - Current 3.05%

Net Operating Income - Current $106,660

Net Cash Flow After Debt Service - Current 0.37% / $6,403

Total Return - Current 2.13% / $37,221

CAP Rate - Pro Forma 4.11%

Demographics 1-Mile 3-Miles 5-Miles

2014 Total Population 160,396 1,221,401 2,763,047

2019 Total Population 163,786 1,252,737 2,824,630

2014 Total Households 71,351 483,996 1,098,202

2019 Total Households 73,567 502,772 1,133,475

Median HH Income $54,989 $42,505 $49,905

Per Capita Income (based on Total Population) $38,412 $28,199 $33,530

Average (Mean) HH Income $85,308 $70,366 $83,647



Year Built 2003

Lot Size 20ft x 80ft

Net Operating Income - Pro Forma $143,782

Net Cash Flow After Debt Service - Pro Forma 2.49% / $43,525

Total Return - Pro Forma 4.58% / $80,226



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P R O P O S E D F I N A N C I N G

First Trust Deed

Loan Amount $1,750,000

Interest Rate 4.0%

Amortization 30 Years

Debt Coverage Ratio 1.06



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I N V E S T M E N T O V E R V I E W

I N C O M E

Retail

Apartments Current Pro Forma

GROSS POTENTIAL RENT $86,400 $108,000

GROSS POTENTIAL INCOME $86,400 $108,000

EFFECTIVE GROSS INCOME $86,400 $108,000

GROSS POTENTIAL RENT $55,200 $72,000

GROSS POTENTIAL INCOME $55,200 $72,000

EFFECTIVE GROSS INCOME $55,200 $72,000

Combined Effective Gross Income $141,600 $180,000

Total Expenses $34,940 $36,218

% of EGI 24.7% 20.1%

NET OPERATING INCOME $106,660 $143,782

NET CASH FLOW BEFORE DEBT SERVICE $106,660 $143,782

Income and Expenses






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Current Per SF Pro Forma Per SF

Real Estate Taxes $24,124 $5.37 $25,018 $5.56

Insurance $3,500 $0.78 $3,500 $0.78

Water/Sewer $3,200 $0.71 $3,200 $0.71

Repairs and Maintenance $1,500 $0.33 $1,500 $0.33

Electricity $1,200 $0.27 $1,200 $0.27

Management $1,416 $0.31 $1,800 $0.40

TOTAL EXPENSES $34,940 $7.77 $36,218 $8.06

% of EGI 24.7% 20.1%

E X P E N S E S



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F I N A N C I A L O V E R V I E W

Location

848 Fulton StreetBrooklyn, NY 11238

Price $3,500,000

Down Payment 50% / $1,750,000


Price/Square Foot $778.47

Apartments - Rentable Square Feet

3,100

Retail - Gross Leasable Area (GLA)

1,396

CAP Rate - Current 3.05%

CAP Rate- Pro Forma 4.11%

Year Built 2003

Lot Size 20ft x 80ft

Type of Ownership Fee Simple

Financing

FIRST TRUST DEED

Loan Amount $1,750,000

Interest Rate 4.0%

Amortization 30 Years

Scheduled Income

Ret Rentable SF 1,396Apt 1 Bdr 1 Bath Flat 550Apt 1 Bdr 1 Bath Flat 550

Apt 1 Bdr 1 Bath Flat 1,100Apt 1 Bdr 1 Bath Flat 1,100

Total 4,496

Income Current Pro Forma

Apartments - Gross Potential Rent $86,400 $108,000

Retail - Gross Potential Rent $55,200 $72,000

Combined Gross Potential Rent $141,600 $180,000

Gross Potential Income $141,600 $180,000

Effective Gross Income $141,600 $180,000

Less: Combined Expenses $34,940 $36,218

Net Operating Income $106,660 $143,782

Debt Service $100,257 $100,257

Debt Coverage Ratio 1.06 1.43

Net Cash Flow After Debt Service 0.37% / $6,403 2.49% / $43,525

Principal Reduction $30,818 $36,701

Total Return 2.13% / $37,221 4.58% / $80,226

Expenses

Real Estate Taxes $24,124 $25,018

Insurance $3,500 $3,500

Water/Sewer $3,200 $3,200

Repairs & Maintenance $1,500 $1,500

Electricity $1,200 $1,200

Management 1,416 $1,800

TOTAL EXPENSES $34,940 $36,218

EXPENSES/SF $7.77 $8.06

% of EGI 24.7% 20.1%

SECOND TRUST DEEDLoan information is time sensitive and subject to change. Contact your local Marcus & Millichap Capital Corporation representative.



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Value Indicators

848 Fulton Street

856 Fulton Street

944 Fulton Street

974 Fulton Street

741 Fulton Street

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Average Price/BSF

Avg. $842.88

P R I C E P E R B S F

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Total Rentable SF:

Year Built:

Offering Price:

4,496

2003

$3,500,000


Close of Escrow:

Total Rentable SF:

Year Built:

01/10/2018

2,693

1930


Price/SF:

CAP Rate:

$778.47

3.05%

Sale Price:

Price/BSF:

$1,900,000

$705.53

Subject Property

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Comments

Comments

Building is built 20ft x 55ftTaxes: $18,377

R7A, C2-4 zoning3 apartment units with ground-floor retail


R7A, C2-4 zoning2 apartments, ground floor retail

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Close of Escrow:

Total Rentable SF:

Year Built:

12/28/2016

4,500

1930

Sale Price:

Price/BSF:

$4,800,000

$1,066.67



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Comments





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Close of Escrow:

Total Rentable SF:

Year Built:

07/20/2016

2,520

1930

Sale Price:

Price/BSF:

$1,750,000

$694.44

Close of Escrow:

Total Rentable SF:

Year Built:

09/15/2015

2,597

1930

Sale Price:

Price/BSF:

$2,350,000

$904.89

848F U L T O N

OVERVIEWM A R K E T3 L O C A T E D

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B R O O K L Y N

G E O G R A P H Y

High population densityMere it to be counted as a standalone city, Brooklyn would be the fourth largest in the nation.

Culturally diverseThere are almost 100 different ethnic groupsoffering unparalleled diversity and access to thecultures of the world.

Competitive business costsBrooklyn has lower business costs than Manhattanand is easily accessible to the tri-state marketplace.

The Borough of Brooklyn

Located across the East River fromManhattan, Brooklyn is the most populousof the five New York City boroughs.Brooklyn covers 71 square miles of the landmass shared with Queens. Within itsboundaries are thousands of acres of parks, 7miles of beaches and 65 miles of shoreline.The terrain is flat to gently sloping. Brooklynis bordered to the east and south by theAtlantic Ocean, to the west by the UpperNew York Bay and the East River, and theborough of Queens is to the north.



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B O R O U G H

I N F R A S T R U C T U R E

The borough of Brooklyn, with a population of morethan 2.6 million, is located entirely within Kings County and is divided into 18 community districts, many of which have been made famous in movies, books and television. One of the most well-known districts is 13, which includes Coney Island and Brighton Beach. The most populous is Community District 18, containing Flatlands, Mill Basin, Canarsie, Marine Park and Bergen Beach.

*ForecastSources: Marcus & Millichap Research Services, U.S. Census Bureau, Experian

Brooklyn is served by three major airports: JFK International, La Guardia and Newark Liberty International. Airlines at these airports fly to every major city in the world, transporting more than 100 million passengers per year. Newark Liberty is also one of the largest cargo hubs in the nation.

Brooklyn boasts one of the most advanced mass-transit systems in the country. The New York City subway contains multiple lines with approximately 150 stations, while an extensive bus network moves residents through the region. The borough is also served by the Long Island Railroad, which offers commuter rail service.

Main roadways include the Brooklyn-Queens Expressway, Prospect Expressway (Route 27) and Gowanus Expressway (Interstate 278). Port facilities in Red Hook and the Brooklyn Army Terminal service cargo and cruise lines.

AirportsJohn F. Kennedy International AirportLaGuardia AirportNewark Liberty International Airport

Major RoadwaysExpressways - Brooklyn-Queens, Gowanus, ProspectState Route 27, Belt Parkway, Jackie Robinson Parkway

RailCommuter Long Island Railroad

Subway New York City Subway

PortRed Hook, Brooklyn Army Terminal

The Borough of Manhattan is:100 miles from Philadelphia210 miles from Boston230 miles from Washington, D.C.790 miles from Chicago

New York City Population By Borough

Brooklyn

Queens

Manhattan

Bronx

Staten

2,629,100

2,326,900

1,640,500

1,435,600

475,600



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E C O N O M Y

New York City has the largest economy in the nationand houses more Fortune 500 companies than anyother city in the country. While many corporateheadquarters are nearby in Manhattan, Brooklynbenefits greatly from both the employment andeconomic stimulus that these companies bring to theregion. In fact, more than half of Brooklyn residentswork outside of the borough’s borders, utilizing NewYork City’s multiple transportation options tocommute to their jobs. This source of income hashistorically benefited Brooklyn’s economy, causingretail sales growth to outpace the national average formost of the last 20 years.

Brooklyn’s prime competitive advantage to otherboroughs is its lower cost of doing business. KingCounty houses many of the back-office operations ofManhattan companies. The growing technologyindustry in Manhattan, “Silicon Alley” extends intodowntown Brooklyn. The borough is home to morethan 84,000 businesses, the vast majority of firms havefewer than 20 employees. Many companies are locatedin the old Brooklyn Navy Yard, which has become 300acres of private manufacturing and commercial activity.Today, “the Yard” has more than 40 buildings,hundreds of tenants and nearly 7,000 employees.

Also playing important roles in the local economy are awide range of service and trade employers, especially inthe education and health services sector. Othersignificant contributors include manufacturing,government and trade, transportation and utilities.

*ForecastSources: Marcus & Millichap Research Services, Bureau of Economic Analysis, Moody’s Analytics, U.S. Census Bureau,



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L A B O R

The Brooklyn Borough provides 601,000 jobs to residents and other commuters that work in Kings County. While this number does not account for the sizable proportion of Brooklyn residents who work in Manhattan or elsewhere, it still reflects a massive employment backdrop for the borough’s 2.6 million inhabitants. Brooklyn offers a diverse labor force, and businesses seeking to move into or expand within the borough should have access to plenty of skilled labor.

Brooklyn will slightly outpace the national employment growth rate, registering an average of 1.4 percent annual expansion through 2020. In fact, all employment sectors are forecast to post gains in the next five years.

As Brooklyn is home to the largest proportion of New York City’s residents, its local economy is geared toward providing for the needs of the population. The largest share of Brooklyn’s employment base belongs to the massive education and health services sector. These employers provide 36.4 percent of borough employment, or roughly 218,600 jobs. Additionally, the trade, transportation and utilities sector makes up another 20.7 percent of borough employment.

Over the next five years, the fastest-growing employment segments in Brooklyn will be the professional and business services at 3.5 percent, which provides a sizable portion of high-quality jobs. The construction, information and leisure and hospitality sectors are forecast to grow by more than 2.0 percent annually.

* ForecastSources: Marcus & Millichap Research Services, BLS, Moody’s Analytics



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E M P L O Y E R S

Education and health services is the largest labor sector in Brooklyn. Most of the borough’s major employers are in healthcare, including Brookdale Hospital, Maimonides Medical Center, New York Methodist Hospital and the Brooklyn Hospital Center. All of these are general medical and surgical hospitals. Healthcare jobs form an important cornerstone of the borough’s economy, given the generally higher wages associated with healthcare positions. Additionally, the jobs are relatively stable and the industry is forecast to add positions in the next five years. New York is often hailed as one of the most attractive and exciting locations to practice medicine, and it will remain a magnet for many of the world’s top medical graduates.

Although dominated by healthcare, the vast majority of Brooklyn’s businesses are small, private firms. Most companies in Brooklyn have fewer than 20 employees. Midsize employers (20 to 99 employees) are primarily in trade, services and manufacturing. The preponderance of small to midsize firms comprise an important source of space demand in Brooklyn’s office property sector.

At 21 percent of total borough employment, the trade, transportation and utilities sector provides many jobs. Two of the largest employers are the New York City Transit Authority and Verizon Communications.

Major Employers

The Brookdale University Hospital & Medical Center

Maimonides Medical Center

New York Methodist Hospital

New York City Transit Authority

The Brooklyn Hospital Center

Long Island College Hospital

New York City Board of Education

Kingsbrook Jewish Medical Center

Woodhull Medical Center

*ForecastSources: Marcus & Millichap Research Services, Environics



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Demographics

Brooklyn’s population will increase by 0.7 percentannually over the next five years. In absolute numbers,the borough will add more than 47,000 residentsduring this time period.

Borough residents are, on average, younger than thenation, with a median age of 34.4 years, compared with37.5 years for the U.S. Many young professionals whowork in Manhattan reside in Brooklyn to take advantage of lower housing costs. Individuals in the 25-to 39-year-old age bracket comprise 17.8 percent of the total population, exceeding the national rate of 13.5 percent.

Brooklynites are also more educated than the averagefor the country, with 29.5 percent having attained atleast a bachelor’s degree, compared with the nationalfigure of 28.8 percent.

The median household income in Brooklyn is around$49,700 annually, less than the national median of$56,100 per year. The borough’s lower medianhousehold income reflects a younger population andhas contributed to a low homeownership rate of 27.1percent. The borough’s median home price of $417,900 prevents many residents from being homeowners but supports a vibrant rental market.

B R O O K L Y N

*ForecastSources: Marcus & Millichap Research Services, BLS, Moody’s Analytics



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Quality of Life

Ongoing revitalization efforts boroughwide have spawned a modest rebirth of the local economy. As the maritime industry’s impact wanes, borough officials are developing creative ways to capitalize on the desirable waterfront location. Several initiatives seek to develop residential, commercial and recreational areas in the Brooklyn Navy Yard, Erie Basin/Sunset Park, Newtown Creek and the Red Hook Marine Terminal. Recentprojects, such as Brooklyn Bridge Park, which includes housing, hotel and recreational elements, and the nearly complete Pacific Park, are transforming the Brooklyn skyline and lifestyle. Additionally, the Brooklyn Nets play in the Barclays Center.

Residents choose to live in Brooklyn for many reasons.Perhaps the most compelling factor is its diversity. Eachneighborhood houses representatives from nearly all ofthe world’s cultures. A sense of community prevails, however, as does a sense of history and tradition, as Brooklyn is the most populous borough in New York City, and many people can trace their heritage to the area.

Brownstones on tree-lined streets and diverse artisticcommunities blend with world-class institutions such asthe Brooklyn Academy of Music, the Brooklyn Museum, the New York Aquarium, Prospect Park and the Brooklyn Botanic Garden.

N E W Y O R K C I T Y

* ForecastSources: Marcus & Millichap Research Services, Experian,National Association of Realtors®, Moody’s Analytics

The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including estimates and forecasts, were used and may be subject to revision.



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Development activity spreads beyond Manhattan and Brooklyn as operations tighten. An expansionary mindsetamong the largest corporations in the world is driving the local economy, sponsoring a virtuous cycle of risingmultifamily rental demand. Operations are strengthening rapidly as net absorption hits the highest rate of thecurrent cycle, encouraging builders to accelerate plans for future projects. As a result, the pace of deliveries willmore than triple last year’s levels, indicating confidence among builders in the solidity of local demand. WhileManhattan will still receive the majority of new supply, Brooklyn is quickly gaining steam as renters seek out moreaffordable options along the East River in locales such as Williamsburg and Greenpoint. Meanwhile, real estatevalues have risen enough to support construction in Queens, the Bronx and Staten Island. Planned completions inthe outer boroughs will surpass the prior peak as the outward shift gains more traction. While the robust pace ofdeliveries is likely to soften operations over the coming year as new rentals lease up, it will be unable to halt arental rate increase above the rate of inflation.

Value-add and repositioning buyers dominate in effort to boost returns. Historically low interest rates andabundant access to commercial credit are motivating investors to deploy capital in search of yield. Dollar volumeand transactions are rising, with more than $9.2 billion in closed deals in 2015, as buyers seek out both capitalappreciation and attractive NOIs. While institutions will overwhelmingly favor Manhattan assets, the focus isbeginning to transition toward Brooklyn, where cap rates can be up to 60 basis points higher. Meanwhile, privatebuyers are seeking out properties with value-add opportunities, particularly in Manhattan. Typical assets in thisstrategy will include outdated rentals in need of cosmetic updates, which give a quick boost to cash flow whileproviding a more conservative approach as real estate values continue to ascend. Cap rates will fall below 4 percentat the high end, while outlying and suburban locations will exchange ownership in the mid-5 percent range,providing multiple opportunities for investors to purchase assets. Greater realized sales prices may promptadditional sellers into the market, expanding deal flow in the year ahead.

Employment: Local New York City organizations will hire 90,000 new workers thisyear, expanding total payrolls by 2.1 percent. Over the last 12 months, 101,000 newpositions were created, a 2.4 percent improvement year over year.

Construction: Developers will complete more than 30,000 new apartments this year,dramatically increasing the pace of deliveries from last year, with the majority of newstock targeting Manhattan and Brooklyn. In the previous year, 13,000 rentals werebrought to market.

Vacancy: The largest supply growth of the current cycle will foster a transitory shiftupward in vacancy to 2 percent, up 30 basis points from 2015. In the prior fourquarters, vacancy rates declined 40 basis points as the pace of construction slowed.

Rents: Strong growth in net migration and new household formation will ensuresufficient demand to promote average effective rent growth of 2.5 percent to $4,123per month. Last year, average effective rents tacked on 4.0 percent.

2.1% increasein total employment

30,000 unitswill be completed

30 basis pointincrease in vacancy

2.5% increasein effective rents

Corporate Expansion Boosts Multifamily Demand; Buyers Shifting to Outer Suburbs

2016 Multifamily Forecast



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Economy

Housing and Demographics

• Over the past year, New York City organizations created 101,000 positions, expanding total employment by 2.4 percent. In the preceding 12 months, 137,500 workers were hired, a 3.4 percent boost to payrolls.• During the prior four quarters, the education and health services sector outperformed the broader economy, with job creation reaching more than 28,100 places. Professional services and hospitality businesses also produced robust growth, adding 31,500 and 12,700 positions, respectively.• Retail offerings are swelling, too, as Neiman Marcus, Nordstrom and Tesla are all opening more storefronts.

The locations offer residents easier access to shopping options throughout the city. In particularly, Tesla’sstorefront will be the first of its kind in Brooklyn, generating excitement as old neighborhood warehousestransition to stores targeting the local higher-income consumers.

• Outlook: In the coming year, local organizations will create 90,000 new jobs, advancing payrolls 2.1 percent asbroad strength in tourism and retail spending promotes a healthy labor environment.

• Over the coming year, the five boroughs will add more than 37,000 new households, along with more than111,000 residents through net migration, boosting demand for both single-family housing and multifamilyliving options.

• The median price for a single-family home rose 2 percent to more than $475,000 over the past four quarters.During this same period, median household incomes lifted 3.1 percent to more than $64,300 per year.

• After considering costs for a downpayment, taxes and insurance, the average mortgage payment in the metro ismore than $2,460 per month, while the average rent is above $4,000 per month. However, minimumqualifying incomes for mortgages are nearly $110,000, indicating that most metro inhabitants will likely belifelong renters.

• Outlook: Despite the relative affordability of a mortgage payment in comparison to average metro rents, the size of the downpayment required, along with the location of average single-family homes, will keep many residents in rentals.

*ForecastSources: Marcus & Millichap Research Services; BLS; Economy.com; NAR




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Construction

Vacancy

• In 2015, builders completed more than 13,000 apartments, with development centered mostly in theManhattan and Brooklyn boroughs. However, construction firms are showing an increasing desire to deliverprojects in the Bronx and Queens, with activity up dramatically from 2014 levels.

• Incredibly tight operations in the multifamily sector have encouraged builders to expand the pipeline to morethan 70,000 units with completions scheduled through 2018. The majority of the deliveries this year will targetsubmarkets seeing robust occupancy gains, such as Williamsburg and Dumbo in Brooklyn and Midtown andthe Flatiron District in Manhattan.

• Topping this year’s expected completions is JDS Development Group’s 626 First Avenue in MidtownManhattan along the East River. Containing nearly 800 luxury rentals, the two-tower structure will also boastan amenities package that includes an indoor lap pool, sky bridge lounge and fitness center.

• Outlook: Builders will complete more than 30,000 units this year, with more than 21,000 apartments set forcompletion in Manhattan and Brooklyn.

• Soaring demand for rentals is continuing to pressure the metro vacancy rate, which fell 40 basis points over thelast 12 months to just 1.7 percent. In the previous year, vacancy remained unchanged.

• While the vast majority of Manhattan posted occupancy gains during the last year, the Financial District andthe Lower East Side are outperforming. Vacancy rates in the two neighborhoods fell to 1.4 percent and 0.5percent, respectively. Midtown West was the only submarket to record an uptick of 50 basis points in vacancyto 3.1 percent, largely due to increased construction.

• Building on the incredible momentum in Manhattan, Brooklyn posted a vacancy decline of 30 basis points to3.5 percent, led by waterfront properties in Greenpoint and Williamsburg.

• Outlook: The delivery of more than 30,000 rentals this year will prompt a 30-basis-point rise in the metrovacancy rate to 2 percent as new units lease up.

*ForecastSources: Marcus & Millichap Research Services; MPF Research




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Rents

Vacancy

• Robust net absorption well above development prompted a 4 percent lift in average effective rents to more than$4,000 per month, with all boroughs recording strong gains.

• Boosted by tight occupancy and limited new supply, rents in Manhattan are more than $800 above the nexthighest borough at more than $4,300 per month. The Financial District and the Lower East Side appreciatedthe most, climbing 8.6 percent to $3,979 per month and 10.2 percent to $4,900 per month, respectively.

• Tenants seeking more affordable offerings are shifting toward Staten Island, where average rents popped 7.6percent to $1,356 per month. Meanwhile, Brooklyn is benefiting from occupant demand crossing the EastRiver from Manhattan, registering a 4.5 percent swell to $3,694 per month.

• Outlook: While the intense pace of construction will cause temporary dislocations in operations this year,average effective rents will move up 2.5 percent to $4,123 per month.

• Thriving operations in New York City encouraged investors to boost their capital allocations in the metro,pushing closed transactions up 18.2 percent as dollar volume topped $9 billion. The majority of trades were inManhattan, while buyer appetite was most improved in Brooklyn.

• Average prices paid over the past year reached $384,000 per unit, led by several deals in Manhattan that closedabove $750,000 per unit. Meanwhile, valuations continue to move upward in Brooklyn, where average pricesper unit are now above $440,000.

• First-year yields have fallen into the mid- to low-4 percent range, with outer borough deals closing above 5percent, particularly in the Bronx and Queens. Top-tier Manhattan assets can exchange ownership below 4percent, while similar stock in Brooklyn will trade in the mid-4 percent range.

• Outlook: Despite a robust delivery schedule for 2016, a lack of available inventory for sale will limit transactionvelocity, prompting an intense bidding environment as investors attempt to deploy capital. An abundance ofcheap credit will provide plenty of incentive for additional buyers to enter the market.

*ForecastSources: Marcus & Millichap Research Services; MPF Research; CoStar Group, Inc.; Real Capital Analytics



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Local Highlights

• Following the first interest rate increase since 2008, the Federal Reserve has promised a measured, patientapproach to future rate hikes. Recently, the mixed picture of U.S. economic data has given several members ofthe bank’s monetary policy committee reason to pause. Robust labor market indicators present positiveevidence of continued expansion, while manufacturing and inflation expectations have weakened due to thestronger dollar. As a result, the central bank will likely weigh the balance of data over the coming monthsbefore enacting additional rate hikes.

• Multifamily housing trends have continued to accelerate over the past year, with the national vacancy ratefalling 40 basis points to 4.1 percent. Meanwhile, development remains considerable, although generallylimited to primary markets; deliveries in 2015 exceeded 230,000 units for the second straight year, the highestannual total since 2000. However, despite the incredible pace of construction, net absorption surpassed supplygrowth, supporting a 5.6 percent climb in average effective rental rates.

• Fannie Mae and Freddie Mac are underwriting five-, seven- and 10-year commercial property loans withmaximum leverage of 80 percent. Interest rates for these loans will range from the 3.7 percent to 4.2 percent,depending on loan structure and maturity, for loans above $3 million. Portfolio lenders, including commercialbanks and life insurance companies, offer debt at 65 to 75 percent loan to value on 10-year terms at 3.60 to4.25 percent. Floating-rate terms typically carry a maximum LTV of 65 percent for stabilized properties, whilepricing at a 250- to 425-basis-point spread above Libor. CMBS issuance topped $100 billion last year, butwider spreads have curtailed activity thus far in 2016.

Capital Markets

• Mayor Bill de Blasio is set to propose a streetcar line that would connect Brooklyn and Queens along the EastRiver over a 16-mile stretch. The project would provide new transportation solutions for both boroughs amid amassive surge in multifamily development along this corridor.

• A Met Foods store on Browne Street in Flushing has been demolished to make way for a new 14-story, 84-unitcondo tower mixed-use development. This highlights the incredible demand for multifamily housing in themetro amid record tightness in local operations.

• Rising office rents in Manhattan are triggering an exodus among firms toward more affordable spaces inBrooklyn. As a result, Heritage Equities is moving to construct a 480,000-square-foot office complex at KentAvenue in Williamsburg. The continuation of this trend will draw more workers to Brooklyn, raising demandfor local rentals.

• Social-media giant Facebook is looking to acquire more than 500,000 square feet in Manhattan, along withlooking to hire up to a 1,000 new workers as the firm continues to expand.

• Vornado Realty Trust is considering plans to combine One and Two Penn Plaza into a more than 4 million square-foot office and retail complex as the firm works with the city to redevelop the area. Vornado owns

more than 9 million square feet of property in the surrounding area, providing incentive to repackage the assets.


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of OUR APPROACH

THE ADVANTAGE4 L O C A T E D I N B R O O K L Y N



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Since 1971, Marcus & Millichap has been the premier provider of investment real estate brokerage services. In2013, the firm announced its listing on the New York stock exchange under the ticker symbol MMI. Taking thefirm public was another major step toward solidifying the Marcus & Millichap brand for decades to come. Withmore than 1,600 investment professionals throughout the United States and Canada, Marcus & Millichap is thelargest brokerage firm focused exclusively on investments. By specializing 100 percent on investments andorganizing our sales force into property specialty groups, we provide clients with superior market knowledge andtransaction expertise targeted specifically to the unique requirements of each property type. Having pioneered theindustry’s most powerful marketing system, the essence of Marcus & Millichap’s value proposition is our ability to“make a market” for each property through expanded market exposure, which generates the broadest buyer interestand results in maximum value.

We combine comprehensive market research, state-of-the-art technology and communications systems with accessto the industry’s largest pool of private and institutional investors. The result is the most efficient process formatching buyers and sellers locally, regionally and nationally. We offer investment expertise in all major propertytypes, including apartments, retail, office, industrial, single-tenant net-lease, seniors housing, hospitality andlodging, manufactured home communities, self-storage, golf and resort properties and land.

The Marcus & Millichap Advantage



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Marcus & Millichap utilizes a powerful and proprietary marketing system tofacilitate the sale, purchase or exchange of investment properties nationwide.This platform is supported by our national inventory of investmentproperties, state-of-the-art communication technology and our culture ofinformation sharing.

Through investment specialization, we have accumulated the largest database of qualified investors in the industry.Through the personal local relationships maintained by our investment professionals, we provide unparalleledaccess to potential buyers for each property we represent.

Each property is exposed to the broadest pool of qualified investors. Our unique culture brings a superior level ofexpertise to each transaction. The large number of owners and investors who repeatedly conduct business withMarcus & Millichap serves as a testimony to our success in matching buyers and sellers, and maximizing value.

A pioneer in real estate technology, Marcus & Millichap leverages the power of its sales force and the entirebrokerage community to assure maximum exposure for each listing and meet investors’ needs.

Our real-time property marketing system, supported by reliable property and market information, facilitates thematching of buyers and sellers from coast to coast.

Investors have come to rely on Marcus & Millichap for access to investment opportunities that meet their specificparameters, including sensitive timing demands driven by 1031-exchange requirements.

The Industry’s Most Powerful Marketing System

Access to more qualified investors than any other source.

The largest investment brokerage sales force, a culture of information sharing.

Our investment property inventory is recognized for its size, diversity, quality,deliverability and underwriting standards.

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Our commitment and focus on investment brokerage services is rooted in our founders’ philosophy that the mosteffective market knowledge and expertise can only be generated through specialization. Our sales force and servicesare further specialized by property type and geography, leading to the deepest and most up-to-date marketknowledge, as well as personal relationships with owners and investors. To support our commitment tospecialization within each property type, the firm has instituted National Specialty Groups, which organize thetraining, communication and marketing activities of our sales force by property type. Our specialty groups includeNational Multi Housing Group, National Retail Group, National Office and Industrial Properties Group,National Hospitality Group, National Manufactured Home Communities Group, National Self-Storage Group,National Seniors Housing Group, Net Leased Properties Group, Healthcare Real Estate Group, National Golf andResort Properties Group, National Land Group and Student Housing Group.

Information sharing among our sales force and throughout the brokerage community best serves our clients’interests when all of our agents present investment opportunities to their clients. This results in the broadestpossible exposure for each property and the most visible investment opportunities for investors. We “make amarket” for each property we represent while expanding investors’ choices and investment options.

Marcus & Millichap believes in maintaining long-term relationships with its clients by providing the industry’shighest quality services. We offer a number of services and capabilities designed to help clients maximize theirinvestment returns. Through our Research Services Division, Marcus & Millichap Capital Corporation, NationalSpecialty Groups and Major Account Services, we offer an array of services that help investors meet their objectivesbefore, during and after each and every transaction. In addition, our investment-experienced management teamoperates with a hands-on philosophy focused on quality assurance and support for agents and clients in everymarket.

Specialization

Making a Market Through Information Sharing

Value-Added Brokerage

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• We review comparable property rents, recent sales, current for-sale properties and local market conditions.

• Our investment team creates financial performance scenarios with input from clients in order to help assess pricing and formulate the right strategy.

• Our investment professionals conduct detailed market surveys that provide an accurate and competitive estimate of a property’s current and future value.

• A comparison of property trends and values in various submarkets enables investors to assess the desirability of moving equity from one market to another in order to take advantage of local cycles and opportunities.

Marcus & Millichap’s Research Services Division is comprised of experienced real estate analysts. Our marketresearch is specialized by property type and integrates local market trends, as well as regional and nationaldevelopments, to support property evaluation, pricing and positioning. Clients who are pursuing a transaction willbenefit from the combination of our investment research capabilities and the market knowledge of our agents.During the hold period of an investment, owners can utilize numerous research publications and analysiscapabilities to help maximize property performance.

As a part of our effort to create value for property owners and investors, Marcus & Millichap Capital Corporationoffers access to the most competitive capital sources, tailored by property type. Property owners can take advantageof refinancing opportunities to increase their returns during ownership. Investors can rely on our expert capitalmarket knowledge and benefit from our ability to secure well-managed, competitively priced financing throughour network of prominent national and regional lenders. Our national team of finance specialists possessesexperience in providing financing for a full range of investment property types.

Expert Underwriting/Positioning

Investment Decision Support Through Market Research

Access to Competitive Financing – Marcus & Millichap Capital Corporation

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We have tailored our services and delivery system to meet the needs of larger private and institutional investors.We provide major clients access to a special group of highly experienced financial analysts, research professionals,writers and graphic designers. Our Major Account Services (MAS) team delivers state-of-the-art underwriting,property and market analysis, marketing and presentation capabilities. Services include financial modeling, analysisand valuation, portfolio analysis, preparation of offering memorandums, specialized marketing material andgeneration of full-scale marketing packages. Key assignments for major accounts are planned and executed with theinvolvement of the firm’s management team to deliver the proper level of expertise to every client.

Marcus & Millichap’s national product specialty groups provide clients with product knowledge and transactionexpertise geared specifically to the unique requirements of each property type. Our specialists work closely withmajor clients to understand their long-term objectives and to formulate the most effective marketing plan andteam for specific projects. Our capabilities produce superior results for major clients, whether the assignmentinvolves a single asset or a large multi-market portfolio.

Our national sales force is managed by a team of market experts who were investment sales professionals at somepoint in their careers. Marcus & Millichap has a long-standing philosophy of supporting its sales professionalswith noncompetitive managers whose purpose is to provide clients with premier investment brokerage services.Managers foster these services by providing ongoing training and coaching of the sales force, supporting client andagents’ needs, and overseeing the transaction process to ensure the best possible results for every client.

Major Account Services

National Specialty Groups Research

Management Team of Investment Experts

R E S U L T S : Maximizing Results Through Value-Added Services

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Marcus & Millichap helps sellers maximize value. Because assets are marketed to a wide range of qualified investors from across the country, sellers receive optimal access to potential buyers. In 2015, the company’s unique national platform, marketing system and investor relationships secured out-of-state buyers for 46 percent of the firm’s total transactions.

To have a cushion for negotiation, you must have potential buyers to negotiate with. If you over-price your property, it is not likely to be shown. If your property is being shown, but not sold, maybe it is being used to make other listings more attractive.

The diagram below shows the segment of prospective purchasers who are likely to see your property based upon the relationship of its asking price to its fair market value.

Moving Capital, Making Markets, Maximizing Value

Pricing Evaluation

54%

46%L O C A L B U Y E R S

O U T- O F - M A R K E T B U Y E R S

The diagram below shows the segment of prospective purchasers who are likely to see your property based upon the relationship of its asking price to its fair market value.

ASKING PRICE IN RELATION

TO FAIR MARKET VALUE

% OR PROSPECTIVE PURCHASERS

WHO WILL VIEW PROPERTY

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Education

New York University, Stern School of Business, M.B.A.Howard University School of Law, J.D.Hofstra University, B.B.A.

D W A N E O M A R J O N E S

Dwane Omar Jones specializes in commercial real estate investments and ground-up development in New York City. His deep market knowledge, exceptional analytical and underwriting skills, and wealth of relationships make him a valued advisor and partner.

Mr. Jones earned his Juris Doctorate degree from Howard University School of Law in Washington, D.C., where he was a Howard University School of Law Merit Scholar, and won the CALI Excellence for the Future Award in Contract Law. Mr. Jones earned his undergraduate degree in Business from the Zarb School of Business at Hofstra University on Long Island, in New York. While at Hofstra, Mr. Jones became a member of Alpha Phi Alpha Fraternity, Inc., served as chapter President during his junior year, and was a Dean’s List student.

He previously worked as a corporate attorney at a large New York City law firm on corporate reorganization matters. While at the firm, Mr. Jones engaged in the liquidation of a large commodities brokerage under the Securities Investor Protection Act and advised a client acting as Trustee on potential litigation issues related to the dissolution of a financial services firm holding over $600 billion in assets. He was also heavily involved with several of the firm’s pro bono initiatives, including representation of clients seeking Special Immigrant Juvenile (SIJ) Status, research on Military Law reform, and Family Court counsel. Mr. Jones has also worked in Cape Town, South Africa, focusing on corporate, commercial litigation and real estate matters, and counseling clients on compliance with South Africa’s Broad-Based Black Economic Empowerment Act.

Mr. Jones earned his M.B.A. from the New York University Leonard N. Stern School of Business with Specializations in Entrepreneurship & Innovation, Man-agement, and Real Estate, where he was a Management Leadership for Tomorrow Fellow, a Robert Toigo Foundation Fellow, and a Consortium for Graduate Study in Management Fellow. At Stern, Mr. Jones worked on a team with the Director of the Center for Real Estate Finance Research to produce a Stern Signature Project on the development of a Real Estate Bubble Early Warning System for the World Economic Forum in Davos.

Mr. Jones was born in Kingston, Jamaica, and raised in Brooklyn, New York. He is passionate about God, his family, his community, and real estate. He is the President of the Howard University School of Law Alumni Club of New York and is a member of the New York State Bar.



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Presented By:

Dwane Omar Jones260 Madison AvenueNew York, NY 10016Tel: (212) 430-6138 (direct) Attorney Registration #: 4980488 Broker License: NY: 10301209317 [email protected]

www.jonesinvestmentco.com

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